Diddle Limited produces ornamental statues for gardens whose selling price, costs and contribution per unit are as follows:

The same specialized clay is used in all three statues and costs £6 per kg. The company faces a shortage of this clay, with only 3,000 kg available in the next month. The board of directors is therefore considering which statues should be produced in order to maximize contribution in the coming month. The sales director has suggested that production should concentrate on Athena as this statue has the highest contribution of the three products. Is the sales director right?

Maximum predicted demand for the three products for the coming month is as follows:

Clio: 198 units

Diana: 900 units

Athena: 200 units

Transcribed Image Text:

Selling price Materials (clay) Direct labour Variable overheads Contribution Clio Diana Athena £ £ 81 58 115 (30) (12) (42) (15) (27) (30) (6) (3) (8) 30 4 16 35